More Echoes From 2011 As European Stocks Signal Trouble Ahead

As the mainstream media gets over-run with 'buy-the-dippers' and 'healthy retracement' protagonists with the S&P down a monstrous 1.5% from its highs, it is perhaps worth noting (h/t Doug Kass) that Europe's broad equity market index is now down over 5% from it's peak two weeks ago (as is the UK's FTSE index). In yet another echo of last year's liquidity-fueled spurt-and-slump, European equity markets (along with US and European credit markets as we have already noted) are sending a warning signal that trouble may lay immediately ahead for US equities. The Euro-Stoxx index has just crossed below its 100DMA for the first time in over 4 months having dropped over 4% on the last two days. Add to this size of margin debt (as we noted earlier) and the ultra-low levels of cash at equity mutual funds and what is now the largest drop since the rally began (an incredible fact that we have hardly dropped more than 2% peak to trough in five months in Cembalest's sweet serenity) may well mean more pain is to come.

It's all been said before ... what's the point of QE when all the £££$$$ taken out of the market when government announces QE ending? They should be forced to invest for a minimum time period of 2 years ... OR SOMETHING.

Yes. "And equity has caused it." How this impacts US equities in a. Egative way I simply don't understand. And just as obviously Doug got his ass handed to him as we went all in on a sell off to start the year. Of there are equities worth shorting here...for professionals like Mr. Kass of course..."but this ain't Lehman and the glory days." will the bulk of Europe's banking system be taken out by a total collapse of Spain? Possibly. But how will the RISK be transferred sheeple? If you answer "to Iran"...well...sure. "If you're the United States." this thing stinks to high heaven, it feels like a controlled collapse "over there" and that means interest rates stay at or near zero just like the Fed has said they will and "bulls and bears make money." simply put "the numbers don't lie." the market has rallied into March on the "news" that the EU is about to implode.

Bennies only goal at this point in time is get Barry re-elected. He doesnt have much ammo left but luckily the average Americans memory is only about 30 days........ The presses start in August after an interim 20% market swoon. Picks for the S&P on Election day and the price at the pump?

My thinking to a tee, gator. Too early to gun it, will have petered out when Obama/Chairsatan could best capitalize on it. My guess for QE fanfare would be shortly after Labor Day, when tv viewing surges and the debates are underway.

I get the feeling Ben is more concerned with who is going to buy all those T-bills. A good 20% correction will bring in the buyers and hold the line on inflation. Looks like the S&P is going to have to take one for the team...